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DENVER-UDR Inc. has formed a joint venture with Kuwait Finance House that will leverage $180-million of equity to acquire $450 million of newer apartment complexes in high-barrier markets. UDR, formerly United Dominion Realty Trust, is a multifamily REIT with approximately 50,000 apartment units. Kuwait Finance is an Islamic bank with $37 billion of assets and a $10-billion market capitalization.

Kuwait Finance put up 70% of the equity and UDR the remainder. The plan is to acquire assets over the next couple of years and hold them for up to seven years. The venture will target class “A” assets with a minimum value of $20 million. Citigroup Global Markets Inc. assisted in arranging the joint venture.

The agreement calls for UDR to earn asset and property management fees and, if the investments meet certain performance goals, promotes on the investments as well, without prohibiting UDR from making acquisitions outside the partnership, company president Tom Toomey said in a prepared statement. He did not reveal the JV’s IRR goal or the markets in which it is looking and could not immediately be reached for further comment. UDR’s CFO Dave Messenger also was not immediately available.

KFH chief executive Mohammad Sulaiman Al-Omar used the announcement in part to lure out additional JV partners. “KFH is keen on working with experienced partners such as UDR with the current focus being on income producing assets,” he said.

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